Government notifies changes in FDI policy

The government today notified changes in the foreign direct investment (FDI) policy in sectors including pharmaceuticals, defence and single-brand retail.

These decisions were announced earlier in the week with a view to make India more investor friendly and an attractive FDI destination.

These decisions were announced earlier in the week with a view to make India more investor friendly and an attractive FDI destination.

“The decision will take immediate effect,” the Department of Industrial Policy and Promotion (DIPP) said in a press note.

The changes in the policy include allowing 100 per cent FDI under government approval route for trading, including through e-commerce, in respect of food products manufactured and/or produced in India.

To attract investment in the defence sector, the government has removed the condition of ‘state-of-art’ technology, besides permitting foreign investment in manufacturing of small arms and ammunitions.

The government has also permitted 100 per cent FDI through automatic route in broadcasting carriage services like teleports, direct-to-home and mobile TV.

In a significant reform move, the government allowed 100 per cent FDI in airlines and relaxed norms for overseas investments in brownfield airports.

In private security agencies, FDI limit was raised to 74 per cent from 49 per cent earlier.

In single-brand retail trading, government said the mandatory local sourcing norm for foreign firms “will not be applicable up to three years from commencement of the business i.e opening of the first store for entities undertaking single brand retail trading of products have ‘state of art’ and ‘cutting edge’ technology and where local souring is not possible”.

After completion of the exemption period, the foreign company in the next five years will have to meet the domestic sourcing norm at an annualised average rate of 30 per cent. Thereafter, they have to comply with the norm on an annual basis.

The DIPP also notified the changes in pharmaceuticals, in which government has allowed FDI upto 74 per cent through automatic route and beyond that under government approval.

The government has also relaxed the norms in animal husbandry sector.

FDI into the country grew by 29 per cent to USD 40 billion in 2015-16.